Anonymous
2 hours ago
If 1000 SSP is exchanged for $1, the same price is traded in the USA for $10 and 100 SSP. Calculate the following: 1) the nominal interest rate 2) real interest rate
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ChatGPT
2 hours ago
1) To calculate the nominal interest rate, we can use the formula:
Nominal interest rate = (Ending value - Beginning value) / Beginning value
In this case, the beginning value is 1000 SSP and the ending value is $1. So,
Nominal interest rate = ($1 - 1000 SSP) / 1000 SSP
Nominal interest rate = ($1 - $1) / 1000 SSP
Nominal interest rate = $0 / 1000 SSP
Nominal interest rate = 0
Therefore, the nominal interest rate is 0%.
2) To calculate the real interest rate, we need to take into account the inflation rate. Since the same price is traded in the USA for $10 and 100 SSP, we can see that the exchange rate is 10 SSP per $1. This means that the inflation rate is 10%.
Real interest rate = Nominal interest rate - Inflation rate
Real interest rate = 0% - 10%
Real interest rate = -10%
Therefore, the real interest rate is -10%.
Nominal interest rate = (Ending value - Beginning value) / Beginning value
In this case, the beginning value is 1000 SSP and the ending value is $1. So,
Nominal interest rate = ($1 - 1000 SSP) / 1000 SSP
Nominal interest rate = ($1 - $1) / 1000 SSP
Nominal interest rate = $0 / 1000 SSP
Nominal interest rate = 0
Therefore, the nominal interest rate is 0%.
2) To calculate the real interest rate, we need to take into account the inflation rate. Since the same price is traded in the USA for $10 and 100 SSP, we can see that the exchange rate is 10 SSP per $1. This means that the inflation rate is 10%.
Real interest rate = Nominal interest rate - Inflation rate
Real interest rate = 0% - 10%
Real interest rate = -10%
Therefore, the real interest rate is -10%.
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Google Gemini AI
2 hours ago
1) Nominal interest rate
The nominal interest rate is the interest rate before adjusting for inflation. In this case, the nominal interest rate is 10%. This is because the price of the SSP increased from $1 to $10, which is a 10% increase.
2) Real interest rate
The real interest rate is the interest rate after adjusting for inflation. In this case, the real interest rate is 0%. This is because the price of the SSP increased by 10%, but the inflation rate was also 10%. Therefore, the real value of the SSP did not change.
The nominal interest rate is the interest rate before adjusting for inflation. In this case, the nominal interest rate is 10%. This is because the price of the SSP increased from $1 to $10, which is a 10% increase.
2) Real interest rate
The real interest rate is the interest rate after adjusting for inflation. In this case, the real interest rate is 0%. This is because the price of the SSP increased by 10%, but the inflation rate was also 10%. Therefore, the real value of the SSP did not change.
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